NEC: Dinneen praises, encourages industry

By Susanne Retka Schill | February 04, 2009

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Web exclusive posted March 2, 2009, at 9:24 a.m. CST

Renewable Fuels Association President and Chief Executive Officer Bob Dinneen was in fine form in spite of a hoarse voice, praising and encouraging the ethanol industry in the face of difficult economic times at the 14th annual National Ethanol Conference Feb. 23 in San Antonio. "We all know that the finest steel is made with the hottest fire," he said. "And while we have been and continue to be tested, the ethanol industry will come through this a stronger, more competitive and more sustainable industry." He pointed out that last year, in spite of a flagging economy and unprecedented commodity price volatility, the U.S. ethanol industry produced and sold a record 9 billion gallons, growing by 34 percent even as the nation's economy was slowing.

As a sign of the ethanol industry's contribution to the nation's economy, Dinneen pointed to the 240,000 new jobs and the industry's relative strength compared to other sectors in the struggling U.S. economy. Even with idled capacity, the ethanol industry is running at 85 percent capacity; while the U.S. manufacturing sector's overall utilization is at about 70 percent of its capacity. He also praised the ethanol industry for improvements such as energy and water efficiency and the advancements in cellulosic ethanol commercialization efforts.

Dinneen recapped the RFA's work in addressing the industry's policy concerns in Washington, D.C., and in providing information for the debates that emerged in the past year about food versus fuel and ethanol's land use impact.

In a press conference held later in the morning on the first day of the NEC, Tom Darlington, a consultant with Air Improvement Resources Inc., released his findings on land use change impacts attributable to projected increases in corn ethanol production. "While originally thought to be large, we've concluded it's actually small," Darlington said. Initial analyses done on land use change projections for corn-based ethanol included increased ethanol production through 2015, but used corn yields from 2008 without factoring in projected yield increases. An analysis done by Informa Economics for the RFA projects found that those yield increases in corn should supply the increase in demand for corn for ethanol through 2015, without reducing corn supplies available for exports. Assuming those projections are correct, Darlington said in his analysis, he didn't include any indirect land use change outside of the United States.

The second major difference in his analysis, Darlington said, involved distillers grains. "There's also a land use credit associated with distillers grains that is much larger than people thought." Previous analyses credited distillers grains as a pound for pound replacement for corn, resulting in a 31 percent land use credit for distillers grains replacement for corn. A recent Argonne National Laboratory study, he said, concluded that credit should be larger since distillers grains also replace a portion of the soy meal in rations, and has a higher calorie and protein content on a pound per pound basis than the corn it replaces. Darlington said factoring in the replacement of lower-yielding soybeans in rations and the higher protein and calorie content of distillers grains, the land use credit is much higher at 70 percent.

"If we use Informa's overall analysis of land needs, coupled with the recent Argonne analysis of the impact of distillers grains on livestock feed rations, no new pasture or forest land should be converted in the U.S. or outside the U.S. to meet 15 billion gallons per year of corn ethanol in 2015," Darlington said. "The land use change emissions, therefore, are likely to be zero."

Darlington suggested that the U.S. should use the increased corn production from improved yields for ethanol as long as exports remain stable or increase, and the U.S. should concentrate international efforts on helping other nations increase the yields from their crops to meet their increased needs. "That's a better long-term solution," he said.